Typhoon Haiyan Slams Philippines, Channel Braces For IT Impact

The calamitous typhoon Haiyan that has killed thousands and obliterated whole towns and villages across the Philippines has supply chain experts and solution providers on high alert as they brace for the storm's impact on the country's IT industry.

The Philippines is a leading call center hub for big U.S. tech firms. It is also home to a number of U.S.-owned semiconductor fabrication facilities and a fast-growing data center industry.

"Disasters like this have a ripple effect that usually takes a week or two to really impact companies like us in the channel," said Todd Swank, senior director of product marketing at Equus Computer Systems, a Minneapolis-based custom system builder.

Over the past decade, the Philippines has seen a flurry of overseas investments from firms that have turned the country into an offshore haven for companies interested in taking advantage of the country's skilled labor, low wages and modern infrastructure to support call centers and supply chain logistics.

"We anticipate disruption to the semiconductor industries because of the damage to the country's roads," said Mary Teagarden, an international supply chain expert and global business professor at the Thunderbird School of Global Management in Glendale, Ariz.

Teagarden said most semiconductor chips made in the Philippines are not manufactured for U.S. companies, but instead are for components, circuit boards and switches for China, South Korea and Japan-based companies such as Samsung, Sony and Huawei. The U.S. Department of Commerce estimated in 2006 that 13 percent of U.S. outsourced semiconductor chip production was based in the Philippines.

Early reports from the Philippine's city of Manila suggest the call center industry has only been minimally impacted, according to Teagarden. "The biggest problem is getting to work," she said. "The roads are flooded and there are reports of call center workers being forced to use boats to get to work."

Gail Ferrari Marold, vice president of brand communications at Genpact, the country’s largest business process outsourcing services firm with extensive call centers in the Philippines, said "full contingency measures to ensure employees' safety and continued business operations have been in place."

"All of Genpact’s three sites are within metro Manila and continue to be safe and fully operational," Marold wrote in an email response to CRN's request for interview.

"Our employees are our number one concern and we will continue to work with employees' families in the aftermath of the typhoon," wrote Kevin London, senior vice president of human resources at Fairchild Semiconductor, in a statement to CRN.

Natural disasters such as typhoons and flooding have become an ongoing challenge for companies and countries. In recent years, the Philippines has been bracing itself for natural disasters with companies tracking weather events and situations on the ground in real time, Teagarden said.

According to Jeffrey Karrenbauer, president of Insight, a supply chain consultancy, companies can't plan for earthquakes and tsunamis, but they can make sure they're not dependent on one region for the majority of the components critical to their business. "If there is anything good to say about the human tragedy, it's that there was a good deal of warning giving companies and people time to prepare for the worse."